Evaluating the value of employee assistance programs

Sonya Felix | May 10, 2019

The contents of employee assistance programs are growing and reflecting a wider range of services. At the same time, attitudes to pricing are also changing.

Trader Corp., a Toronto-based digital marketing company serving the automotive industry, expects more from its EAP provider and is willing to pay for it. “Our workforce is increasingly diverse with multiple cultures, generations and genders,” says Beth Worthington, chief of people and culture at Trader Corp. “For us, partnering with an EAP provider is a must-have solution for helping our employees and managers deal with today’s complexities in life and work. When we did [a request for proposal] to find an EAP provider, we got a range of prices. It’s a very competitive industry but we decided to look at services rather than price.”

Changing industry

While EAPs have been around for decades, the industry has evolved in response to several trends encouraging higher use of their services. These include greater awareness and less stigma around mental health, more focus on employee well-being, rapidly evolving technology and the need for vendors to differentiate themselves in a highly competitive industry.

The programs remain an effective tool for people with mental-health issues, but beyond these traditionally recognized offerings, most EAPs now offer nearly 20 types of broader work-life services, says George Shipley, senior vice-president of enterprise benefit solutions at People Corp. and a board member at the Employee Assistance Society of North America.

“On average, depending on the organization, 20 to 30 per cent of utilization is for non-clinical services, such as child care, elder care, youth services, financial counselling and legal support, to name a few,” says Shipley. “These types of services offer immediate access to assistance, which can often reduce an employee’s stress and anxiety.”

Charles Benayon, founder and chief executive officer of EAP provider Aspiria Corp., notes employers are responding to workplace and societal pressures by focusing more on employee well-being. Indeed, about 80 percent of its business is mental-health related. “But we also offer a pretty robust suite of work-life services, such as counselling for legal, financial and nutritional issues, as well as an online wellness platform,” he says. “Recently, we introduced oncological counselling to provide emotional, psychological and navigational support for individuals and families touched by cancer.”

While Morneau Shepell Ltd.’s EAP is certainly available for employee and family mental-health concerns, it’s also used for anything that can escalate to affect physical, financial and social wellness, according to Roger Cattell, the organization’s head of client sales for North America. “We want to engage employees early on in a wellness discussion.”

Employers are thinking more broadly about what EAPs can offer, says Irene Keller, product director of disability and integrated health solutions at Sun Life Financial. “The landscape is changing, especially with millennials in the workforce. Increased digital capabilities and less stigma around mental health makes employees more likely to want to seek help and talk to a counsellor. This generation wants the service to be immediate, fast and confidential. Employees can even receive mobile counselling by text on their way home from work.”

Is the price right?

So with the increasing ease of access and rising demand for a larger variety of services, is higher EAP usage affecting cost?

Evidence of EAP value

Employees who use EAPs often experience positive changes in work performance, such as fewer tardy days or absences, higher levels of work productivity and improved colleague relations, according to a 2015 study by the U.S.-based Employee Assistance Trade Association.

Looking at more than 60,000 cases to compare unscheduled tardy and absent days before and after using an EAP, it found the number of tardy days fell from an average of 2.3 to 0.91. It also set an EAP’s typical return on investment at more than $3 for every $1 invested.

The association noted dozens of studies have demonstrated EAP services can produce direct cost savings for employers, including reduced medical, disability and workers’ compensation claims, as well as fewer tangible savings from lower indirect business cost losses related to poor work performance.

Source: Employee Assistance Trade Association, 2015

Typically, the more the EAP is used, the higher the cost for plan sponsors, since the standard pricing model bases next year’s price on today’s usage rate.

“It can be a catch-22 situation for employers who want to incorporate EAPs into their total rewards or make the EAP part of the organization’s culture,” says Sherry Shaw, vice-president at Accompass Inc. “Higher utilization is tied to higher pricing and most employers are looking for stability in costs.”

At Trader Corp., the EAP price was based on an estimated 10 per cent usage, but the rate actually increased to 12 per cent during a time when staff were being terminated. “The changes at the company caused higher stress levels,” says Worthington, adding it was helpful to have an EAP representative onsite to provide exit counselling and out placement. “We have a guaranteed three-year contract with our EAP, but after that I expect the price will go up.”

Some organizations adopt a pay-as-you-go, reactive approach to their EAP, remedying a workplace event by pulling resources together only after it has started impacting the workplace, says Cattell, noting EAP call centres can light up when something out of the ordinary happens. For example, in communities directly affected by the North American wildfires last summer, about 40 per cent of the working population called Morneau Shepell’s EAP. “If you have a pay-as-you-go model, then it could be a large expense for employers, and it’s not an optimal employee experience.”

But choosing between a flat rate or pay-as-you-go approach presents a dilemma for employers, adds Cattell. “If you’ll only pay for a certain percentage of the work population to use the EAP, then what are you doing for the rest of the employees? Do they also need support? Maybe they don’t know they can ask for help. To just focus on utilization is missing the bigger picture. The conversation these days is moving away from utilization to participation. How can you get the rest of the organization healthy before they call 911? How can you help insulate them from life’s risks?”

Tips to ensure an EAP adds value

Step back and think about what type of EAP services the organization needs

Use multiple communication approaches to ensure employees are aware of the confidentiality of EAP services

Shipley encourages employers to think more strategically about their EAPs and the associated pricing. “If you look at the average cost of group benefits, it costs between $3,500 and $5,500 per person, per year. Whereas, relatively speaking, accessing an EAP is a nominal expenditure by comparison. Unlike many employee benefits, EAPs provide continuity and accessibility along the entire health continuum, from the healthy employee to the struggling employee, and to employees looking to actively return to health and the workplace from a leave or disability. Arguably, the value of an EAP program, if managed effectively, can exceed the expenditure relative to other benefits. “In short, EAP is an effective tool in supporting any organization’s business goals and objectives.”

Value-add

Research shows a reduction in absenteeism, presenteeism, long-term disability and turnover after a company introduces an EAP, says Benayon. “Can we definitely say the EAP is responsible for this? Probably not. But we know an EAP makes a significant contribution to well-being in conjunction with other things.”

If a company didn’t previously offer an EAP, it’s easy to show value once one is introduced, says Cattell, noting an EAP combined with a comprehensive wellness program should show a drop in health costs. “For example, if you can reduce the smoking rate from eight per cent to seven per cent, that can have an impact on insurance rates and increase in overall health and wellness. On average, EAPs can reduce absenteeism by 20 per cent. On the flip side, presenteeism is hard to track, but you can track the impact on benefits costs. If you don’t offer help and support for employees, then benefits spending will increase over time.”

And while it seems clear that EAPs add value, the actual return on investment is still a million-dollar question, says Katie Dimeski, a consultant in health strategies and solutions at Aon. She advises plan sponsors to take a step back and think about what their employees are getting out of the EAP.

“Today’s employers are using EAPs in more strategic ways,” she says. “We recommend they look at the type of contract currently in place and assess whether it is conducive to the goals and objectives of their program.”